Indonesia is ramping up efforts to shield the Rupiah from a global rout rattling emerging markets. To curb imports and narrow the deficit, the government has increased import duties by up to 10%; delayed import-heavy infrastructure projects; and increased the use of biofuels to cut foreign fuel purchases. The government has also issued Ministry of Finance Regulation 110/PMK.010/2018, amending Ministry of Finance Regulation 34/PMK.010/2017 and identifies 1,147 consumer goods which are subject to the higher duties (the previous 2.5% or 7.5% rate has been raised to 10%). The government also announced that electricity projects worth approximately USD 24-25 billion and with a combined potential capacity of approximately 15,200 MW have been postponed, while encouraging the broader use of a locally-manufactured 20% blended biodiesel called B20.

The Ministry of Finance has urged Eximbank to provide financing for more exporters in a bid to boost exports.

House of Representatives (DPR) revises exchange rate assumption

The DPR budget committee has revised the Rupiah exchange rate assumption in the 2019 state budget bill from IDR 14,400 per USD to IDR 14,500 per USD.

Bank Indonesia (BI) to punish regulation violators

BI is becoming more vigilant in sanctioning corporates and individuals who violate a BI regulation that limits the number of foreign banknotes allowed when crossing the Indonesian border. BI Regulation 20/2018 allows only licensed institutions to carry more than USD 1 million in banknotes cross-border. The applicable fine is up to 10% of the carried banknotes, capped at IDR 300 million (approximately USD 20,299).

Energy

Local content in the energy sector

MEMR Decree 1953 K/06/MEM/2018, effective 5 September 2018, requires entities in the oil and gas; minerals and coal; electricity; and renewable energy sectors to increase local content. It does not provide specific percentages for such increases.

E-Commerce

Indonesia to lower overseas online shopping limit

The Ministry of Finance has issued Regulation 112/PMK.04/2018 lowering the import limit for online shopping from USD 100 to USD 75. Items over the USD 75 threshold will be subject to customs duty and import tax.

Taxation

Exchange of taxpayer data

Indonesia and Singapore have started exchanging taxpayer financial data.

International Trade

Indonesia and Australia trade agreement

The Indonesia-Australia Comprehensive Trade Partnership Agreement (IA-CEPA) has been concluded and eliminates various import tariffs. The automotive, woodwork and furniture industries are the sectors with the most potential benefit.

Indonesian steel gets tariff exemptions from the US

The US has exempted 19 Indonesian steel products (carbon, alloys and stainless steel) from import tariffs.